The Politics

When it comes to infrastructure spending, politics often plays unproductive roles. First, the difficulty in achieving consensus to fund infrastructure means that spending often is behind the curve, paying for emergency maintenance instead of anticipating the next generation’s needs. Second, notwithstanding reform efforts, politicians direct spending to their priorities, but not necessarily to the overall priorities for the country. Shovel-ready projects trump a considered, longer-term plan and a bridge to nowhere can be the result.

Similarly, when the federal government undertakes to dispense loan guarantees and other technology investment funds, it is often constrained by time pressures to dispense monies within the time frame of the legislation. And they must choose between competing projects either without full knowledge of the investment landscape or under political pressure to make specific decisions. Redoubled investments in a Solyndra can be the result.

Better would be separating these decisions from the political sphere somewhat by placing them within an InfraBank staffed for the purpose of choosing investments for the future over an open-ended timeframe. Politicians could still spend money on favored InfraBank investments, if the politics pointed that way, but overall the program would move forward, regardless of short-term political concerns. That would be a net win for American infrastructure and technology.

Secondly, economic growth comes from the increasing productivity. But not all productivity improvements can be measured in the short term or financed by the private sector. A corporation can measure the productivity of a new robot, but the investment in a community college, which trains workers on computers to manage that equipment, is a different matter. As Anatole Kaletsky wrote recently, fiscal stimulus in the US since 2008 — in contrast to fiscal contraction in the UK — resulted in 2.7% GDP growth in the US compared to .8% GDP decline in the UK. Another economist, Robert H. Frank, suggests that road repair alone could restore the economy. Steady spending on infrastructure and technology undergirds GDP growth and means more jobs and more tax revenue, two more wins.

Thirdly, the most polarized and gridlocked Congress in recent memory will continue to argue for months over whether and how to cut spending, raise taxes or both. Conservatives are focused on the national debt; Liberals are focused on unemployment. Economic growth is an answer to both, especially if it results from investments in the future that do not depend upon increasing the national debt. An investment vehicle accessible to both the 99% and the 1%, which offers no taxes after five years on principal or interest and grows the economy but puts private sector money — both personal and corporate — to work in productive ways would be a win for politicians, left right and center.